Urgent need for reforms

In the movie Coolie, Amitabh Bachchan plays Iqbal, a dashing, confident young man, who is considered the leader of the local coolies. He organises a labour strike, against the evil Zafar played by Kader Khan, which brings the station to its knees. The movie which was one of the highest earning movies of its time was however infamous for almost bringing to an end Amitabh Bachchan’s film career and life due to an accident on the sets. It is a miracle that Amitabh Bachchan lived. Real life workers who work as hired labour in India’s manufacturing industries however are not so lucky as the Bollywood mega star.

Take the case of Rabiul. Rabiul , a native of Assam, died in a rope-making factory earlier this year at Verna after his head was crushed in a roller machine. That worker safety and labour reforms are a grotesque joke in India is a sad reality. One only needs to look at the industrial town of Manesar to get empirical evidence for this malaise. Accidents that crush limbs are taking place at an alarming rate in this automobile town in Haryana. It is in this gruesome backdrop of zero worker safety that Prime Minister Narendra Modi is seeking to launch the biggest overhaul of labour reforms in India. Reforms which could effectively make it tough for workers to form labour unions. Given how lopsided the power balance between owners and workers is in India’s organised sector, it is strange that the thrust of these proposed labour reforms focuses mainly on breaking down the interplay between workers and their peers. What’s more, as a part of the proposed revamp, a factory employing fewer than 300 workers would be allowed to lay off workers without government permission. Market experts argue that raising the ceiling on worker layoff limits would encourage growth of small and medium enterprises. This is indeed an accurate assessment. However, any reforms which focus solely on the owner’ perspective will be a skewed set of reforms.

According to a study conducted by noted economists Simon Deakin and Antara Haldar, evidence linking labour law deregulation to growth, is weak, whether the focus is on India or the experience of other countries. Building labour market institutions is a long-term process which requires investment in state capacity for the management of risks associated with the transition to a formal economy. And that can’t happen without building institutional processes which support both owners rights to hire and fire and the workers rights to earn a decent livelihood and organise themselves as a collective. It can’t be one without the other. Labour protection legislation is one of the basic features of any key labour reform.

The main aim of such laws should be to create more, safer, and rewarding jobs for the labour pool. This includes standards on minimum wages, working conditions, overtime controls, right against unjustified retrenchment, right of worker to compensation in case of accident at work place, post-retirement benefits, personal progress, skill development, social security and dignity of labour. These are issues pertinent in the long run from the point of both workers and industries. This is something which the current set of proposed labour laws has not sufficiently addressed. At the same time it is true that Indian labour laws are unnecessarily complex and cumbersome. India ranks a lowly 134 out of 189 countries on the ease of doing business index. It is in this regard that the present ruling dispensation should put in its energies. If there is easy entry and exit, it won’t be much time before there will be burgeoning manufacturing firms, with more investment, more number of factories, more employment and lower costs.

This will hopefully result in a robust manufacturing sector which will have the capacity to absorb any retrenched and laid off employees in productive employment. Moreover its high time that Shramev Jayate which is one of the Prime Ministers pet projects be lent some policy momentum from the mandarins of South Block. It is one of the most important elements of the “Make in India” vision and aims to create an opportunity for India to meet the global requirement of skilled labour workforce in the years ahead.